The statement of stockholders’ equity provides details about changes in the stockholders’ equity accounts during the period. This information helps investors and analysts better understand the company’s capital. Successful companies earn money for future operations (reported as retained earnings) through sales and rely less on raising new capital through the issuance of stock. 

INSTRUCTIONS 

Use PETsMART’s statement of stockholders’ equity in Appendix F to answer these questions. 

1. Explain how retained earnings changed from a balance of $40,239,000 in 2003 to a balance of $174,053,000 in 2004.

2. How much did additional paid-in capital increase during this same time?